Is Refinancing Worth the Cost?
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Shopping for a mortgage loan? We will be glad to help! Give us a call at (207) 571-8034. Ready to get started? Apply Here.
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It has been said that only when your new interest is at least 2 points lower, should you refinance your loan. Maybe that was good advice a number of years ago, but as refinance costs have been falling recently, it could be a good time to look into it. A refinance may be worth its cost several times over, because of the benefits that it brings, in addition to a lower interest rate.
Advantages
You might be able to bring down your interest rate (sometimes substantially) and make smaller mortgage payments with your refinanced mortgage loan. Additionally, you might be given the option of pulling out some of the equity in your home by "cashing out" some money to remodel your home, consolidate debt, or plan a special vacation. You may be able to refinance to a shorter-term mortgage loan, giving you the ability to add to your home equity quicker.
The Cost
As you probably expect, you will have to pay for your process of refinancing. You'll have the same sort of expenses and fees as with your current mortgage. Included in the list will typically be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Doing the Math
You might look into paying points to receive a lower interest rate. When you pay (on average) 3% of the loan amount up front, your savings for the term of the refinanced loan can be significant. We recommend that you talk to a tax professional before acting on advice that the paid points can be deducted on your taxes.
An additional expense that borrowers might consider is that a lower rate of interest will reduce the interest amount you'll deduct from your taxes. We can help you do the math! Call us at (207) 571-8034.
Ultimately, for most borrowers the total of up-front costs to refinance will be made up very quickly in savings each month. We will help you determine which mortgage program is perfect for you, considering your cash on hand, the likelihood of selling your house in the next few years, and how refinancing might effect your taxes. Call us at (207) 571-8034 to get started.
Curious about refinancing? Give us a call at (207) 571-8034.